9. Hospital Spending per Discharge, 2009
Adjusted for Differences in Cost of Living
18,142
13,483 13,244
11,112 10,875
10,441
9,870
8,350
7,160
6,222
5,204 5,072
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
US* CAN* NETH DEN SWIZ NOR** SWE AUS* NZ* OECD
Median
FR GER
Dollars
* 2008.
** 2007.
Source: OECD Health Data 2011 (Nov. 2011).
10. WHY ARE US HEALTHCARE COSTS
SO HIGH?
HIGHER PRICES FOR HEALTH CARE
GOODS AND SERVICES
ADMINISTRATIVE OVERHEAD
HIGH UTILIZATION OF TECHNOLOGY
LEGAL CLIMATE AND DEFENSIVE
MEDICINE
11. DRUG COSTS
More than $280 billion will be spent this
year on prescription drugs in the U.S. If
we paid what other countries did for the
same products, we would save about $94
billion a year.
12. Gerard Anderson, a health care economist
at the Johns Hopkins Bloomberg School of
Public Health, says is the obvious and only
issue: “All the prices are too damn high.”
14. Cumulative Increases in Health Insurance
Premiums, Workers’ Contributions to
Premiums, Inflation, and Workers’ Earnings, 1999-2012
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2012. Bureau of Labor
Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1999-2012; Bureau of Labor
Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999-2012 (April to April).
15. Average Annual Worker and Employer
Contributions to Premiums and Total Premiums
for Family Coverage
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2002-
2012.
20. Medicare Enrollment, 1966-2011
NOTES: Numbers may not sum to total due to rounding. People with disabilities under age 65 were not eligible for Medicare prior to 1972.
SOURCE: Centers for Medicare & Medicaid Services, Medicare Enrollment: Hospital Insurance and/or Supplemental Medical Insurance Programs for Total,
Fee-for-Service and Managed Care Enrollees as of July 1, 2008: Selected Calendar Years 1966-2008; 2009-2011, HHS Budget in Brief, FY2011.
Number in millions:
21. Percent Distribution of National Health Expenditures, by Type of
Sponsor, 1987, 2000, 2010
Government Private
1987 (Total = $519.1 billion)
Government Private Government Private
2000 (Total = $1,377.2
billion)
31.8%
68.2%
35.5%
64.5%
44.9%
55.1%
Federal Private Business
State & Local Household
Other Private
Revenues
2010 (Total = $2,593.6
billion)
29. “Medicare spent an estimated $4.4 billion in 2009 to
care for patients who had been harmed in the
hospital, and readmissions cost Medicare another $26
billion.”
Room for Improvement
34. Expand health insurance coverage
Improve coverage for those with health
insurance
Improve access to and quality of care
Control rising health care costs
Goals for Health Reform
35. Promoting Health Coverage
Medicaid
Coverage
(up to 133%
FPL)
Employer-Sponsored
Coverage
Exchanges
(subsidies 133-
400% FPL)
Individual
Mandate
Health
Insurance
Market Reforms
Universal Coverage
36. Health Reform and Delivery System
Changes
Promoting primary care and prevention
Improving provider supply
Developing new models for coordinating
and delivering care
Making use of information technology
Reforming provider payments to
promote quality
37. Improving Health Care
Quality
• Development of a national quality strategy
• Coordinated care through medical homes and
other models
• Quality-based payments for health care
providers and improved information on provider
quality
• Comparative effectiveness research to identify
most effective treatments and interventions
• Enhanced data collection to address health care
disparities
38. Health Reform Implementation
Timeline
2010
• Some insurance
market changes—no
cost-sharing for
preventive
services, dependent
coverage to age
26, no lifetime caps
• Pre-existing condition
insurance plan
• Small business tax
credits
• Premium review
2011-2013
• No cost-sharing for
preventive services in
Medicare and
Medicaid
• Increased payments
for primary care
• Reduced payments
for Medicare
providers and health
plans
• New delivery system
models in Medicare
and Medicaid
• Tax changes and new
health industry fees
2014
• Medicaid expansion
• Health Insurance
Exchanges
• Premium subsidies
• Insurance market
rules—prohibition on
denying coverage or
charging more to
those who are
sick, standardized
benefits
• Individual mandate
• Employer
requirements
40. Medicare Part A Trust Fund
Pre-health reform:
2017 projected insolvency date
Assets as a share of annual spending:
Post-health reform:
2029 projected insolvency date
Projection: Health reform legislation will extend the life of the Medicare Part A Trust
Fund from 2017 to 2029
41. Rate of Medicare Spending Projected to Slow
NOTE: Estimates do not take into account future changes to the Sustainable Growth Rate formula to prevent reduction in fees.
SOURCE: Medicare Baseline Spending before reform from CBO, March 2009 Baseline: MEDICARE; after reform from Kaiser Family Foundation analysis of CBO cost
estimates of health reform legislation, March 20, 2010.
Medicare Baseline Spending
(in $ billions)
Baseline Medicare
Spending
Medicare Spending AFTER
Health Reform
Congressional Budget Office Projections
Projected Savings
69. ADDITIONAL QUESTIONS
TRUE COST OF IMPLEMENTING ACA
HEALTH EXCHANGE IMPLEMENTATION
INDEPENDENT PAYMENT ADVISORY BOARD
IS RATE SETTING THE ANSWER?
70. What sets our really expensive health-care system
apart from most others isn’t necessarily the fact it’s
not single-payer or universal. It’s that the federal
government does not regulate the prices that health-
care providers can charge.
An Emerging Conversation
71. “IT IS NOT THE STRONGEST OF THE
SPECIES THAT SURVIVES,NOR THE MOST
INTELLIGENT,BUT THE ONE MOST
RESPONSIVE TO CHANGE”
Charles Darwin
Before we get into specific provisions of the law, it is helpful to understand what the law sought to achieve. Most people can agree on the underlying problems with our system. Many people (50 million in 2009) lack health insurance and even those with coverage face increasing premiums and plans that may not cover the services they need. Fragmentation in the health care system leads to duplication and inefficient care and means that people do not always receive the best care. Health care costs continue to skyrocket, outpacing increases in inflation as well as workers wages. And, while we don’t all agree on the solutions, the overarching goals for health reform were to address these fundamental problems. The goals spanned four key areas: expanding coverage to the millions of Americans who lack it today; improving the affordability and quality of the coverage for those who are currently insured; improving access to and the overall quality of care that individuals receive; and constraining the growth in health care costs. The law includes numerous provisions designed to address each of these goals. This tutorial will focus on some of the more significant provisions in each area.
The health reform law seeks to expand health coverage by building on the existing public-private system for providing health insurance and filling in the gaps in the current system. It expands eligibility for the Medicaid program, the current safety net health insurance program for the poor. It creates new exchanges, or marketplaces, where people can purchase coverage and, depending on their income, receive premium subsidies to help them afford the coverage. It includes new penalties for employers that don’t offer coverage to their employees and provides tax credits to small employers that do to bolster the availability of employer-sponsored coverage. Supporting these enhanced coverage mechanisms are a new requirement that individuals, with some exceptions, have health insurance (referred to as the individual mandate) and new rules for insurers requiring them to provide coverage to everyone regardless of health status and limiting the variations in premiums they charge people.Together, these strategies are designed to increase significantly the number of people with health insurance.
In addition to the provisions focusing on health coverage, the law makes important changes to the health care delivery system. These delivery system changes are aimed at improving access to care and overall quality and to reign in rising health care costs. They cover a number of areas including promoting primary care and prevention, improving the supply of providers, particularly primary care providers, creating new models for delivering health care that promote quality and efficiency, using health information technology to streamline the delivery of care, and creating incentives for quality care through provider payments.
As one of the overarching goals for health reform, the law contains numerous provisions to improve health care quality. While it’s not possible to describe all of the quality improvement provisions, here are a few of the more significant ones. First, the law requires the development of a national quality strategy to coordinate federal activities to improve the nation’s health. It promotes more coordinated health care through the creation of medical homes and other arrangements that hold providers accountable for the care they provide. Paying providers based on the quality of care they provide and making information on provider quality available to consumers is a central tenet of the law. The law also invests in research to identify and disseminate findings on the most effective treatments. Finally, enhanced data collection will enable a renewed focus on reducing health care disparities.
As difficult as the debate over the health reform legislation was, many people agree that passing a bill was easy compared to the very challenging task of implementing the law.Health reform will be implemented over the next several years. A number of health insurance improvements, including allowing young adults to remain on their parents’ health insurance policies, eliminating lifetime limits and restricting annual limits on coverage, and prohibiting denials of coverage to children with pre-existing medical conditions go into effect this year. Still, the major coverage expansions and significant reforms to the health insurance markets that will guaranteed access to coverage for everyone won’t be implemented until 2014. The many delivery system changes will occur between now and 2014.
With ongoing concern about the growth in Medicare spending, this exhibit confirms that the health reform law is projected to significantly reduce the growth in Medicare spending over the next decade. By 2015, Medicare spending is expected to be $50 billion less than it would have been in the absence of the health reform law. By 2019, Medicare spending is projected to be $100 billion less than it would have been without health reform.Or, on a per capita basis, the annual growth in Medicare spending over a ten year period is projected to decline from 6.8 percent pre health reform to 5.5 percent after health reform.